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How To Identify Areas Where You Could Save More

In the last post, we looked at the conflict between the heart and the hand. The heart represents the long term savings goals that we want to achieve with our money, while the hand is impulsive and keeps reaching out for short term desires and unplanned spending.

I set a goal to save 40,000 shillings towards paying down a loan in the next three months. In the last two years, I have made some investments that meant getting into debt, so my overarching goal is to be 100% debt free.

Have you set a goal? Our Twitter conversations under #AfricaSaves, revealed that some people are walking this journey with us, because they want to save for various things.

Business goals too

If you haven’t set a goal yet, the time is now. Write it down and post it on a visible area. I have a sticky note at my bedside that reminds me what I’m working towards.

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After setting a goal, we need to figure out how to achieve this goal. Remember, this refers to saving outside of the mandated 10% (for retirement, etc.), so we have to cut down on current expenses and “find” the money.

Our expenses are typically grouped into two categories:

  1. Stuff we need. These are non-negotiable expenses like rent, transport to work, basic food and hygiene products etc.
  2. Stuff we want. This group of expenses aren’t critical and we can live without them. Yet we spend money on them because they make our lives more pleasant and comfortable. This can include eating takeaways, gym, clothing, shoes etc.

Over the last week, I’ve tracked my spending habits and it made me realize that I spend too much on things that I want, but don’t necessarily need – like the extra pair of shoes I bought during the week to go with my blue dress, and that lunch date I had with a group of friends.

In order to help me reach my goal, I will have to stop spending on these ‘wants’, so I’ve come up with a savings plan, and I’m going to start following it from tomorrow. I’ll be sure to share my progress in the blog post.

Remember, we are taking baby steps and doing this week by week. If we consistently choose to follow our hearts and not reach out with our hands, we will definitely achieve our goals. The video below demonstrates how this works.

One of the main reasons we fail to reach our goals, is because we tend to focus on the long term results, such as buying a home in ten years’ time. This results to two things:

  1. It becomes more difficult to modify our daily behavior, because ten years feel like a really long time. We tell ourselves that “future me” will be more disciplined than “present me” and as a result  we don’t see how things like buying takeaways, or spending 2,000 shillings is affecting our home savings plan to save ten million shillings.
  2. It’s easy to give up. We receive no small rewards along the way, so we’ll get distracted and start focusing on the present.

One week at a time. Which unnecessary expenses can you save on? Join the conversation in the comments section and on Twitter, using the hashtag #AfricaSaves.

This article is the second in a series of sponsored posts for the BARCLAYS SAVINGS CHALLENGE. I hope the challenge will be as interesting for you as I hope it is for me. You can follow the discussion on Twitter and Facebook and share your own experience by using the hashtag #AFRICASAVES. Visit the Barclays page for useful savings calculators and information on their savings accounts.

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The aim of this blog is to simplify personal finance.
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